Last year I opened an HSA brokerage account with Saturna brokerage services. They're not mentioned very frequently around here so I thought I'd post a casual review. And since I've had the account for almost a year and not wrote anything extensive, I figured I should get it out here now before I forget forever.

First, Saturna Capital has two different ways to open an account. You can open a mutual fund account directly with them and buy their mutual funds. There's no annual fee. Their funds are actively managed and have high (by Bogleheads' standards) fees.

They also have a subsidiary brokerage account option which is just, well, a regular brokerage account. That happens to be a HSA. The actual backend administration and website of the HSA is handled by Pershing LLC, which works with a variety of brokers.

The Saturna account has a couple of nice features that make it work for me [edited 1/27/17 with newer info]: - expenses are low. I can pay my choice of either: 1) 14.95 a trade (for either a stock or a mutual fund) 2) a $25 annual inactivity fee if I don't have any trades at all. [mutual fund only accounts have a $12.50 fee, and no fee if only cash/money market] - I can buy most vanguard ETFs and mutual funds (even admiral shares, I think). - I am able to rollover money into the account every 12 months from the bank where my employer puts my HSA contributions. - Saturna's email support was been very prompt and courteous (and was, incidentally, all handled by the same person). - some mutual funds families have transaction-fee-free funds, either based on Saturna's fee-free list or on Pershing's.

Now, there are some disadvantages: - there are no cash management features (no checks, no debit cards) - there's no way to get a list of which specific funds are fee-free (but none of the ones I was interested in were) - account paperwork needs to be mailed in - the list of cash sweep options isn't published - checks need to be mailed in - not all forms are available for download (they were emailed to me) - The website is a little bit clunky and confusing to use - the website has limited to zero research options - No online funds transfer ability (I needed to mail in my check deposit, an EFT transfer can be set in advance, but would require a phone call to initiate) - to have the deposit categorized as a rollover, I needed to write a note to accompany my deposit check.

Little ProTips I noted: - the SBS brokerage application account type should be checked as "retail", then "other", then write in "HSA" after. (not "retirement" as I originally wrote) - deposit checks need to be made out to "Pershing, LLC" - 5498-SA forms (for contributions) aren't published until May or so (so I haven't gotten mine yet)

That's all I can think of. in my own personal case, I'm in California, where HSA's are not exempt from state income tax. So I picked an investment which, itself, exempt from CA income tax, the vanguard short term TIPS ETF (VTIP). This has not performed well over the last year, but that's besides the point. For the cash sweep I picked DVPXX [later migrated to the insured deposit program] which is also state tax exempt (all of the cash sweeps are roughly 0% rate now). VTIP did have a small year-end dividend, which was paid and then reinvested in the sweep fund 3 days later. So I haven't had much activity but it's worked fine so far!

[I've since made one rollover contribution approximately every 13 months from my work's HSA, by check, mailing it in with a letter to identify the contribution as a rollover, and bought more shares of the ETF, and it's worked without any surprises)

Thanks for the review. I have linked to this from the Wiki Health Savings Account page, as Saturna appears to be competitive with other brokerage choices. $14.95 per trade isn't a high fee for the typical Boglehead HSA which will probably make one or two ETF trades per year.

I also found them very easy to work with and all questions were answered quickly and efficiently by email. Once the account was opened I just setup a link to my checking for the next year's HSA contribution. I just went with one of their funds since it had about a 1% expense ratio. A little high on that but no other fees seemed to balance it some. Using the HSA as more of an investment for now.

Vanguard funds are available however there is an additional $10 commission to buy/sell them. Fidelity Spartan investor/advantage funds are available with the required minimum investments without the additional $10 commission.

This doesn't look correct from what I can see. there's no "additional" fee, nor are spartan funds on the fee free list. Anyone know where that came from?

Vanguard funds are available however there is an additional $10 commission to buy/sell them. Fidelity Spartan investor/advantage funds are available with the required minimum investments without the additional $10 commission.

This doesn't look correct from what I can see. there's no "additional" fee, nor are spartan funds on the fee free list. Anyone know where that came from?

That's what they told me on the phone, so I updated the wiki as its not found anywhere on their site. Said it was due to Vanguard being "low-cost" (YEAH!) for not reimbursing them for mailing prospectuses, etc. where the other fund companies do. As for the Fidelity Spartans, they are not commission free but rather $14.95 (without the additional $10 charged for Vanguard).

yeah they carry all the vanguard funds, you just have to pay the 14.95 trading fee on them.

the ones I see listed as allowing me to place an order:VIPSXVAIPX (admiral)VTIPXVTAPX (admiral)

i also personally own the ETF, VTIP.

Now, take this with a grain of salt,, I was able to place a buy order for some admiral shares with only $80 cash in my account. So I don't know in what way that would have failed spectacularly when i didn't meet the minimum.

then again, since the system would let me try to trade these with 80 bucks, take it with a grain of salt. If access to the admiral funds is a showstopper for you, i'd probably shoot an inquiry to them:http://www.saturna.com/sbs/contact.shtml

Note the $75 "account transfer out" fee. (See the table at the bottom of page 3 of this PDF.) I was planning to sign up, but that fee gives me pause. If I run into problems, I'd like to be able to leave without paying a significant penalty.

Eric wrote:Note the $75 "account transfer out" fee. (See the table at the bottom of page 3 of this PDF.) I was planning to sign up, but that fee gives me pause. If I run into problems, I'd like to be able to leave without paying a significant penalty.

I believe that fee is for a trustee to trustee transfer. Does it apply to a direct rollover?

Easy Rhino wrote:yeah they carry all the vanguard funds, you just have to pay the 14.95 trading fee on them.

the ones I see listed as allowing me to place an order:VIPSXVAIPX (admiral)VTIPXVTAPX (admiral)

i also personally own the ETF, VTIP.

Now, take this with a grain of salt,, I was able to place a buy order for some admiral shares with only $80 cash in my account. So I don't know in what way that would have failed spectacularly when i didn't meet the minimum.

Easy Rhino wrote:And, if I set my Saturna brokerage account to automatically reinvest dividends, would there be a $14.95 transaction fee each time a dividend is reinvested, or does that happen free of charge?

1. the cost for trading a Vanguard fun? ($14.95 or $14.95 + $10?)2. whether Vanguard Target Retirement Funds are available?3. whether admiral shares are available without a $10,000 minimum investment?

TYIA

1. The cost for trading a Vanguard fund is $14.95.2. Vanguard Target Retirement Funds are available.3. I don't know how to check, but admiral shares should require a $10,000 minimum investment regardless of broker.

boobinson wrote:1. The cost for trading a Vanguard fund is $14.95.2. Vanguard Target Retirement Funds are available.3. I don't know how to check, but admiral shares should require a $10,000 minimum investment regardless of broker.

FYI I placed an order to trade the full amount in my account to buy VFIFX. Saturna modified it to withold $24.95 which I assume is their commission. I assume the trade will be executed today.

I guess I'm bumping a couple month old thread, but I'm trying to wrap my mind around whether Saturna would be a good choice for me.

Seems like a lot of people are treating HSA's as bonus 401k's and paying for med expenses out of pocket, which is not bad per se, but my situation is a little different. I don't plan on making any money for the next 3 years as I gear up to go back to school for a graduate degree, so I will probably need to tap the HSA money at some point, unless I want to sell equity from my taxable account (I don't really).

So my initial plan was to get the Saturna account, invest in Vanguard BND, and then trade if I need to pay for significant medical expenses - say, $500-1000 and up. I can handle copays out of pocket. If they were to offer check/ATM I could then pay my significant bills using that, but since they don't I'll probably need to ACH/wire out to my checking account and pay from there.

So question 1, and this may be dumb: If I sell my bonds, ACH to my checking, and then pay for my meds/surgery/whatever, how does the IRS/Saturna know that I'm using the distributions for qualified expenses? In other words, will they let me do this? I would think so think it's called a Health Savings Account, but I don't want any weird surprises just before I go under the knife.

Question 2: Can I do Q1 without the $75 out free? Looks like posters above say that it's only for trustee-to-trustee (I assume this is HSA acct to another HSA acct?), and not for mailing a check, so I will consider this "solved" but I'll probably verify this version of reality with Saturna before I open an account just to make sure they haven't changed their policy.

Question 3: Are there any other hidden components that are going to screw me as an "invest in something safe and then sell part of it to pay for XYZ major expense" investor? If so I can probably go with one of the HSA's that are more savings acct oriented but I'd rather have the option to invest.

Looks like I will be opening at account at Saturna. I will contribute once a year and purchase a mutual fund /ETF once a year. This seems like the best deal at the moment.

PS Remember to keep documentation on any out of pocket medical expenses even if you are not going to be using your hsa in 2014 to pay for them. You can reimburse yourself for those expenses in future years.

JacobyTT wrote:FYI I placed an order to trade the full amount in my account to buy VFIFX. Saturna modified it to withold $24.95 which I assume is their commission.

Sounds like a $14.95 commission plus a $10.00 additional fee. Hm.

The $10 additional fee is for Vanguard only. I spoke to them on the phone, the reason is Vanguard doesn't reimburse them for mailing prospectus etc like the other fund companies do. Another way Vanguard keeps costs down.

I like the Fidelity Spartan TIPS fund at Saturna since I am in a state that taxes HSA earnings.

I was given the following list of fund families have entered into agreements with Pershing and Saturna Brokerage Services for zero commission. Does anyone know if any of these fund families offer a Total Stock Market or S&P 500 fund with low expense ratios?

I got a PM with a question about this account, and I thought I'd share. Since I'm in California, I need to worry about capital gains for state tax purposes. Saturna offers several different methods of lot identification when selling, including individual lot selection.

Also, I looked at a few companies in the "no fee" mutual fund list, even though I had previously burned out on it, and didn't find any really compelling mutual funds. Just a few, because I have to enter the ticker to see if a specific fund is no-fee.

For instance, Dreyfus has two SP500 mutual funds. DSPIX has a 0.2% expense ratio, but is will have a transaction fee at Saturna. PEOPX has a 0.5% expense ratio, and it looks like it is part of their no fee program. (although I'd need to receive a prospectus before I could review the order, lol).

sippyCUP wrote:So my initial plan was to get the Saturna account, invest in Vanguard BND, and then trade if I need to pay for significant medical expenses - say, $500-1000 and up. I can handle copays out of pocket. If they were to offer check/ATM I could then pay my significant bills using that, but since they don't I'll probably need to ACH/wire out to my checking account and pay from there.

You may want to think about a simpler approach. What I do is treat my cash-HSA, the one that comes directly from my employer, as a fund available for both small medical expenses not worth tracking for eternity, and as an easily-tapped emergency fund of last resort. I keep a few thousand dollars in the cash HSA linked to the debit card. I keep the excess with a different custodian where it is invested in Vanguard funds for the long term. Like this, if you do decide you need to tap into the HSA you don't have to mess with the complex and potentially costly transactions.

Is the general consensus that this is the best current HSA custodian? It seems to be the lowest fees if you plan on making just one trade per year-- $14.95 to $24.95). Any reason why I should consider the higher priced alternatives? I'd be interested in using Vanguard funds.

godswrath wrote:Is the general consensus that this is the best current HSA custodian? It seems to be the lowest fees if you plan on making just one trade per year-- $14.95 to $24.95). Any reason why I should consider the higher priced alternatives? I'd be interested in using Vanguard funds.

Thanks in advance.

For some reason it's not a consensus. I spent a while trying to figure out why it's not and couldn't figure it out. IMO it is the best custodian for once/year buy-and-holders.

Thanks! I just signed up, but have been lurking for years! I checked out the thread you linked. Unfortunatly they are focused on the best HSA custodian for medical payouts (ie acutally using the account to pay your medical bills). For that, I do realize Alliant seems to be the best. However, I'm interested in the best for investing, and Alliant does not appear to fit that bill.

JacobyTT wrote:

godswrath wrote:Is the general consensus that this is the best current HSA custodian? It seems to be the lowest fees if you plan on making just one trade per year-- $14.95 to $24.95). Any reason why I should consider the higher priced alternatives? I'd be interested in using Vanguard funds.

Thanks in advance.

For some reason it's not a consensus. I spent a while trying to figure out why it's not and couldn't figure it out. IMO it is the best custodian for once/year buy-and-holders.

Great, Thanks JacobyTT. I thought the same thing--that Saturna appears to be the best for 1 trade per year. I plan on contributing the maximum once a year, and using the account as a retirement savings fund. I'll be interested in using mainly vanguard funds (EFT, most likely).

I'll continue to look around to be sure Saturna is my best bet. The only advantage I can see with using another HSA custodian is to get access to TDAmeritrade or to do multiple trades per year.

SobeCane wrote:I was given the following list of fund families have entered into agreements with Pershing and Saturna Brokerage Services for zero commission. Does anyone know if any of these fund families offer a Total Stock Market or S&P 500 fund with low expense ratios? ...

Off the top of my head, Dreyfus and T.Rowe Price from that list have a few index funds with OK ERs (0.30-.40ish).

JacobyTT wrote:FYI I placed an order to trade the full amount in my account to buy VFIFX. Saturna modified it to withold $24.95 which I assume is their commission.

Sounds like a $14.95 commission plus a $10.00 additional fee. Hm.

The $10 additional fee is for Vanguard only. I spoke to them on the phone, the reason is Vanguard doesn't reimburse them for mailing prospectus etc like the other fund companies do. Another way Vanguard keeps costs down.

I like the Fidelity Spartan TIPS fund at Saturna since I am in a state that taxes HSA earnings.

The additional $10 is kind of a bummer but I guess not a deal breaker. I too was looking to invest in VFIFX after moving over from HSA Bank. So would it be $24.95 plus $1 or $2 for the annual dividend and capital gains distributions reinvestment?

What would be my easiest method for leaving HSA Bank and moving to Saturna? Sell my TDA investments and transfer them back to HSA Bank. Sign up for Saturna. EFT my funds from HSA Bank to Saturna? I don't think I have HSA Bank checks. I doubt it, but is there any way to avoid the $25 account closing fee?

Then after the Saturna account is open, am I able to have direct deposits into Saturna to be held in a money market or other account until I am ready to make my one trade of the year?

JacobyTT wrote:FYI I placed an order to trade the full amount in my account to buy VFIFX. Saturna modified it to withold $24.95 which I assume is their commission.

Sounds like a $14.95 commission plus a $10.00 additional fee. Hm.

The $10 additional fee is for Vanguard only. I spoke to them on the phone, the reason is Vanguard doesn't reimburse them for mailing prospectus etc like the other fund companies do. Another way Vanguard keeps costs down.

I like the Fidelity Spartan TIPS fund at Saturna since I am in a state that taxes HSA earnings.

The additional $10 is kind of a bummer but I guess not a deal breaker. I too was looking to invest in VFIFX after moving over from HSA Bank. So would it be $24.95 plus $1 or $2 for the annual dividend and capital gains distributions reinvestment?

What would be my easiest method for leaving HSA Bank and moving to Saturna? Sell my TDA investments and transfer them back to HSA Bank. Sign up for Saturna. EFT my funds from HSA Bank to Saturna? I don't think I have HSA Bank checks. I doubt it, but is there any way to avoid the $25 account closing fee?

Then after the Saturna account is open, am I able to have direct deposits into Saturna to be held in a money market or other account until I am ready to make my one trade of the year?

I believe that you can just transfer the assets directly. I would contact Saturna.

I notice the HSA Application states a required $100 intial deposit into one of Saturna's mutual funds. Does this mean I have to sink $100 into one? Ideally I want to put the $3,300 cap into vanguard ETFs through their brokerage.

I'm going to call to ask on Monday, but figured I'd ask to see if anyone who's gone through the application process already knows.

Could someone with a Saturna account tell me how to go about funding the account? Do you go straight to "Trading Stocks" and the money will be ACH'ed from bank? Or are you supposed to fund some sort of sweep account (like Vanguard's Money Market)? If so, where do you go to fund this account?

On my initial funding I just mailed a check with the other paperwork. The last two years I have just done an ACH transfer. I did this years funding on Jan 2 but when entering the amount, I missed the decimal point. So instead of $4.250.00 I was transferring $425,000. Saw that on the confirmation email. Luckily, that had the steps to cancel the transaction so cancelled without a problem and redid the correct transfer.

godswrath wrote:Could someone with a Saturna account tell me how to go about funding the account? Do you go straight to "Trading Stocks" and the money will be ACH'ed from bank? Or are you supposed to fund some sort of sweep account (like Vanguard's Money Market)? If so, where do you go to fund this account?

The money sits in a cash sweep money market fund, I provided a list in the first post. You deposit by mailing a check, or you can do an ACH transfer (you need to initiate it by phone)